Deutsche Bank launches $8.5 billion capital hike amid heavy restructuring

Deutsche Bank (DB) said Sunday that it will raise €8.5 billion in new capital and plan the partial sale of its asset management business as it attempts to strengthen its balance sheet following a multi-billion settlement with US legal authorities.

The German lender also revealed a slew of other restructuring plans, including keeping hold of Postbank and gradually integrate it into its German private and commercial banking and wealth management businesses, to realigning its existing global markets, corporate finance and transaction banking businesses into a single division and selling a minority stake in Deutsche Asset Management via a float.

The Frankfurt-based bank will issue nearly 690 million new shares in early April, with subscription rights for existing shareholders, to raise about 8.0 billion euros ($8.5 billion), chief executive John Cryan said during a conference call.

The fundraising plans confirm many investors' expectations that Deutsche Bank would be forced to tap the market for the third time since early 2013. The company will find a new CFO "in due course". That, along with asset disposals at the investment bank, will help raise another €2 billion of capital.

Cryan is set to assume the additional role of responsibility for the bank's USA business, as Jeffrey Urwin retires after a transition period.

The bank said the share sale would boost its common-equity Tier 1 ratio to 14.1 per cent and set a new target of "comfortably above" 13 per cent. Cryan will take direct oversight for the USA operations, and the firm is recombining its investment banking and trading units after splitting the two in 2015. The measure stood at 11.9 per cent at the end of 2016, shy of the then-target of 12.5 per cent for the end of 2018.

After unveiling plans to restructure the business into four units to much fanfare only a year and a half ago, the group's strategy has pivoted once again to further simplify the business model into three divisions.

Deutsche Bank AG is a Germany-based global investment bank.

That helped nearly double the lender's share price since September 26th and made a potential stock sale more attractive.

  • Eleanor Harrison